THE PR. COMMISSIONER OFINCOME TAX -3 vs. ERICSSON INDIA PVT. LTD.
What did the High Court hold?
The Tribunal held that the issue regarding the provision for gratuity and leave encashment was covered by earlier High Court decisions against the Revenue. Similarly, the disallowance of sales promotion expenses treated as capital was also covered by precedent.
What were the facts?
The Revenue appealed against the ITAT's decision concerning the addition of provision for gratuity and leave encashment for computation of income. The assessee argued that the provision was actuarial and supported by the auditor's report.
What were the issues?
Whether provision for gratuity and leave encashment should be added for computation of income. Whether sales promotion expenses treated as capital in nature are disallowable.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
$~1 and 2 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 1405/2018 and 1423/2018 THE PR. COMMISSIONER OFINCOME TAX -3 Appellant Through: Ms. Vibhoti Malhotra, Jr. Standing Counsel with Mr. Sanampreet Singh, Advocate, versus ERICSSON INDIA PVT. LTD. Respondent Through: Mr. Vishal Kalra, Advocate. CORAM: HON'BLE MR. JUSTICE SANHV KHANNA HON'BLE MR. JUSTICE ANUP JAIRAM BHAMBHANI ORDER % 20.12.2018 CM No. 51378/2018 in ITA No. 1405/2018 CM No.52022/2018 and 52023 /2018 in ITA No. 1423/2018 Learned counsel for the respondent-assessee does not oppose these applications for condonation of delay. Accordingly, the applications for condonation of delay are allowed. ITA 1405/2018 and 1423/2018 These appeals by the Revenue in the case of Ericsson India Private Limited relate to the Assessment Yeai32008-09 and 2009-10. 2. The common issue raised in the two appeals relates to "adding provision for gratuity and leave encashment" for the purpose of computation of income under Section ^JB of the Income Tax Act, 1961. This issue is covered against the Revenue by earlier decision of this Court in ITA Nos. 543/2011, 544/2011 and 728/2008. 3. However, Learned counsel for the Revenue has submitted that the Assessing Officer in the present case had also observed that the respondent- assessee had not given proof that the provision for gratuity and leave encashment was on actuarial basis. Learned counsel for the respondent- Signed By:RAM DATT Signing Date:09.10.2024 15:41 Certify that the digital and physical file have been compared and the digital data is as per the physical file and no page is missing. Signature Not Verified
assessee, on the other hand, has drawn our attention to the balance sheet of the company wherein the auditor has specifically stated that the provision for gratuity and leave encashment was on actuarial basis. He has also submitted that the Dispute Resolution Panel had observed that the addition would not be made unless the Revenue had filed an appeal against the decision of the Delhi High Court. Admittedly, no appeals have been preferred against the decisions of the Delhi High Court. In these circumstances, we do not think any substantial question of law arises on the first aspect. 4. The second issue raised by the Revenue in ITA No. 1423/2018 (Assessment Year 2008-09) relates to disallowance of 10% of the sales promotion expenses which were treated as capital in nature. This issue is also covered against the Revenue vide judgement of this Court in the case of ITA No. 1285/2009, The Commissioner of Income Tax versus Sony India Private Limited dated 22"^* February, 2012 and other judgements following this decision. SLP against the said decision, it is stated, has been dismissed. 5 On the second issue also, therefore, we are not inclined to frame any substantial question of law. 6. Accordingly, we do not find any reason to issue notice in these appeals, which are dismissed. ^ , , V/t SANJIV KHANNA, J. ANUP JAIRAM BHAMBHANI, J. DECEMBER 20,2018/MR /
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